Callus v Butler Pharmaceuticals [1992] UKEAT 105_91_0605

EAT
Callus v Butler Pharmaceuticals
[1992] UKEAT 105_91_0605 · 1992-05-06

JUDGE HAGUE :

This is an Appeal by the Claimant Mr Callus against the decision of the Leicester Industrial Tribunal given on 9 January 1991 where by a majority the Tribunal rejected his claim that he had been constructively dismissed by his employers Butler Pharmaceuticals.The outlying facts are quite straightforward and can be briefly summarised as follows.Butler Pharmaceuticals, which had the name of E H Butler & Son Ltd at one time, was a family company which operated as wholesale distributors of pharmaceuticals. Mr Callus joined the company in September 1984 as a salesman, but within under a year he was appointed Sales Development Manager. His job description sets out his title of Sales Development Manager, his responsibility to the wholesale operations director and a number of duties, 10 in all, including the following:
"1.To further the sales of the Company.
2.To develop, implement and co-ordinate Sales policies.3.To motivate, train and control a sales force adequate to achieve agreed targets....6.To ensure Numark services are available and used to maximum advantage by both customers and Company (e.g. staff training, merchandising, shop identification etc.).That job description is dated 1 March 1985. A little later, on 3 May 1985, Mr Callus entered into a formal contract which sets out his appointment and various other matters. Although it is not strictly relevant to what we have to decide, it is important at any rate from Mr Callus' point of view that in Clause 10(iv) there was a restrictive covenant which prevented him for one year after the termination of his employment from soliciting any person who was a customer of the company.In accordance with those arrangements Mr Callus had an office and was provided with a car. He had a small sales staff with him, but only one or two in number. In May 1990 Butler Pharmaceuticals were taken over by a Dutch concern which, as was explained to Mr Callus by one of its executives, Mr Baseley, had plans to expand and develop the business. Mr Callus had a discussion with Mr Baseley on 5 June 1990 in which, we think it is fair to say, he expressed an agreement with the intentions about the expansion of the business. He also had discussions with Mr Silver and Mr Parmamum on 6 June the next day.As a result of those discussions, which centred on what Mr Callus' job would in future consist of, certain things emerged. His job title was to be unchanged and his salary was to be unchanged, though there were to be minor variations which can be said to be of a disadvantage to Mr Callus about certain expenses. But there were two changes which Mr Callus considered to be of importance.First of all he was no longer to have an office of his own, although it was indicated to him that he would have the shared use of secretarial services (we will return to that in more detail in a moment). Secondly the sales representatives who reported to him, and there were two of them at the time, were no longer to report to him. Both they and he were to report to Mr Parmamum instead.Mr Callus asked for the terms of his new job to be put down in writing, because he felt that if he was going to be committed to the company the company should be committed to him. He never in fact got anything in writing. As it happened he had a car accident very shortly after those meetings. He returned for a very short time to work but then had to leave again because of his injuries and did not return. In due course he indicated that in the circumstances he regarded the company as being in breach of their contract to him so that he was effectively constructively dismissed.He made a claim to the Tribunal for unfair dismissal based on that constructive dismissal. The hearing for the Tribunal took rather an unusual course. Mr Callus was there represented by a solicitor. Butler Pharmaceuticals were represented by Counsel and the records show that Mr Baseley, Mr Silver and Mr Parmamum were all there present and presumably available to give evidence. Mr Callus as the Applicant in the usual way gave his evidence first, and for the reasons I will come to in a moment, his was the only evidence which the Tribunal heard.In the circumstances of the case I think it is necessary to go into a little detail about the evidence of Mr Callus as appears from the Chairman's Notes of Evidence and to quote directly one or two passages. In his evidence in chief Mr Callus said this:
"On the 6 June 1990 I saw Mr Silver and Mr Parmamum. I got no support from them. I said it was in breach of my contract, and I wanted it confirmed in writing. I wanted clarification in writing so I knew where I stood. Baseley agreed to this, my new job and specifications. I only said I agreed with his plans for the company. I did not agree to be a Sales Representative with an office in the car. I thought I had been demoted because I was not responsible for a sales force, I did not have an office, and I had to report to Mr Parmamum, the Operations Director, who had no experience of sales. I said I would not report to Mr Parmamum. Mr Baseley said:- "it was his decision, are you querying Mr Parmamum's appointment". I was expected to do everything I did before except that I would do it out of my car. The meeting with Mr Baseley ended by him saying that he would give me the changes in writing."
In cross examination the Chairman's Notes include the following:
"On 5 June 1990 with my meeting with Mr Baseley he told me that office accommodation was being reorganised, I would have full secretarial services but my office was to be my car. I asked whether I would have use of an office, I was told no. I asked if I was based from home as an office and therefore would get a home allowance, that was not accepted. Would I have use of an office when necessary? No room was available and therefore it was not said. Mr Baseley suggested I could use Mr Parmamum's office from time to time, but this was not practicable. Mr Baseley said I could use the meeting room, if it was available. Thereafter I did not use Mr Parmamum's office, I carried on working from home, I took things to Mr Baseley's secretary. I was told I was dealing with sales development, retail sales training, major account negotiations and liaison meetings etc, but there was to be no office and sales staff would not report to me. The salary was the same, the car was the same, the telephone change at home was minor, the financial package was the same. My concern was that in the eyes of my colleagues I was demoted, and also in the eyes of customers, my title was not changed. They could not contact me at my office. Office administration was 10 to 15, several extensions. The customers knew, they knew something had changed, some customers thought that I had been dismissed, I did not go out as a Salesman but as Sales Development Officer."
At the conclusion of Mr Callus' evidence Counsel for Butler Pharmaceuticals made a submission that there was no case to answer and it was that submission that was upheld by the Tribunal. There was thus no evidence called on behalf of Butler Pharmaceuticals because it was not necessary for them to do so. We should make it clear however, that so far as the records show it was never indicated that if the application for the case to be dismissed at that stage had not been successful, Butler Pharmaceuticals would not call any evidence. We think it is fairly clear that if the application had not been successful and the Tribunal had decided to go on with it there would, or probably would, have been evidence called on behalf of Butler Pharmaceuticals.It is certainly permissible for a submission to be made to an Industrial Tribunal that there is no case to answer. It is unusual and we think that except in very plain cases usually undesirable. We bear in mind what was said in particular by Mr Justice Phillips in RIDLEY v G.E.C. MACHINES LTD [1978] 13 ICR 195 when he acknowledged that:
"There may be cases put forward which are so obviously hopeless that it would be a complete waste of time to call upon the respondents to call evidence, and thus prolong the proceedings for what may be a long time at very considerable expense. So, yes, there may be exceptional cases but ordinarily at all events it is better to hear what everybody has to say."
The Tribunal's decision in paragraph 3 summarised Mr Callus' complaint in the following way:"Mr Callus complains of two significant changes. First, he was no longer to have his own office. In future, his motorcar was to be his office. However, he had the use of the chief executive's secretary whenever he wished, and office and other accommodation facilities were available for him to use as necessary. The respondent was re-organising office accommodation".Pausing at that point it seems that this does not really accord properly with Mr Callus' evidence which was the only evidence before the Tribunal. To say that he had the use of the chief executive's secretary whenever he wished is perhaps a contradiction in terms, for no doubt the chief executive would have the first call on the secretary's services, and his evidence was that the office and other accommodation were not available, or at any rate not satisfactorily available for him to use as necessary. Paragraph 3 of the decision continues:
"Second, the two sales representatives who hitherto had reported to him, would in future, like him, report direct to Mr Parmamum, who was to take over responsibilities in this area. Mr Callus was concerned about these changes: in the eyes' of his colleagues, and customers, he was being demoted. The majority of the Tribunal review [sic] that with some reservation because it is quite clear that his job title and responsibilities were not changed."
We now pass to paragraph 11 of the Tribunal's decision, setting out the reasoning of the majority, which is of importance:
"For the purpose of this submission, [and I interpose that is the submission of no case to answer] we act upon that much of the applicant's evidence as we believe. We have indicated an area of doubt within that evidence. The burden of the proof is on the applicant to prove that he was dismissed. To do that he must show that there was a repudiation of contract by the employers sufficiently important to justify his leaving, that he resigned in response to that breach and that he did not delay too long in terminating the contract."
Where a submission of no case to answer is made, we do not think it is proper for a tribunal to pick and choose about the evidence they have heard as to which they believe and which they do not believe. In accordance with usual legal principles, whether there is a case to answer must be determined on the basis of the evidence which the Court or Tribunal has heard up to that point, which ex hypothesi does not include any evidence to the contrary. In other words the submission must be made on the basis that the evidence already given is true. It follows that in apparently not accepting some of the Applicant's evidence the Tribunal misdirected itself in law. It was not entitled to do that. For the purpose of the submission, it had to accept the evidence that Mr Callus had given, unless and until of course that evidence was contradicted by evidence to the contrary given on behalf of Butler Pharmaceuticals.We have set out in a good deal of detail Mr Callus' evidence and it seems to us that that evidence, and it must as we have said be accepted as a whole, does contain a case to answer. On the face of his evidence it appears to us that the combination of the depravation of an office and the salesmen no longer reporting to him, did affect his status. The Tribunal said that there was no evidence about the staff reporting to him, and that may be technically correct, but when one looks at the job description which includes "to motivate, train and control a sales force", that clearly implicitly includes the sales force in question having to report to him.It may well be that if there had been evidence before the Tribunal the other way, they could have found that there was a full answer to Mr Callus' claims and they could properly have rejected his evidence. But in the circumstances, given that they had to accept his evidence, we do not think that the majority were justified in taking the course that they did do. We are comforted in that by the fact of course that the minority member of the Tribunal took the view that there had been a loss of status. In those circumstances we think that there was clearly a case to answer and that the case should not have been stopped at that stage. Counsel's submission of no case to answer should have been rejected and the case gone on with evidence on the other side in the usual way.That means that in our view the majority decision of the Tribunal below cannot stand, but in the circumstances we consider that there is only one possible course open and that is to remit the matter to a differently constituted Tribunal for a re-hearing. We are conscious of the practical difficulties and disadvantages in that course. There is before the Tribunal a letter from the solicitors for Butler Pharmaceuticals from which it is perfectly plain that the grandiose plans for expansion have come to nothing. Exactly the opposite has occurred, because the solicitors' letter says:
"..the Respondents have ceased trading in the U.K. and are currently winding down their operations."
They have not been represented before us today and it seems unlikely that they will be represented before the Tribunal at the re-hearing, but there can of course be no certainty about that. There may unhappily be difficulties of recovery of any award made by the Tribunal, but that is not a matter for us. Time has passed and Mr Callus has told us about his difficulties of claiming benefit and finding a new job; though frankly it seems to us that the point about the restrictive covenant is now a dead one with the passage of time.However, these are all matters which are really by the way. We cannot go further than we have indicated and set aside the decision of the Tribunal below and order a re-hearing before a differently constituted Tribunal.